What You Must Know About Tax Breaks When Planning Your Taxes

The goal of tax planning is to arrange your financial affairs so as to minimize your taxes

. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits. Every taxpayer likes to make sure that the IRS gets as little as possible, and to ensure that it happens it is essential take every tax deduction, credit or other income adjustment you can.

Heres a quick look at a few tax breaks that often get overlooked but that could save you some tax dollars.

Extra charitable gifts

Expenses incurred while doing charitable work often arent counted on tax returns. While it's not possible to deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost of that material is deductible. The use of your vehicle for charitable purposes, such as delivering meals to the homebound in your community or taking the Scout troop on an outing brings a deduction of that travel at 14 cents per mile.

Moving expenses

When relocating to another job, moving expenses can be written off, and most taxpayers are aware of the same. Fresh graduates who get a first job at a distance from where he or she has been living is also eligible for this tax break.

Job hunting costs

While college students cant deduct the costs of hunting for that new job across the country, already-employed workers can. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies, are deductible as long as you itemize.

Military reservists travel expenses

Members of the military reserve forces and National Guard who travel more than 100 miles and stay overnight for the training exercises can deduct related expenses. This includes the cost of lodging and half the cost of meals. If you drive to the training, be sure to track your miles.

Child Care Credit

Millions of parents claim the Child and Dependent Care Credit each year to help cover the costs of after-school daycare while mom and dad work. But some parents overlook claiming the tax credit for child care costs during the summer. This tax break also applies to summer day camp costs.

Mortgage refi points

Refinance your home loan, allows a deduction of those points, too, as long as you use the refinanced mortgage proceeds to improve your principal residence.

Retirement tax savings

The Retirement Savings Contribution Credit was created to give moderate- and low-income taxpayers an incentive to save. When you contribute to a retirement account, either an IRA or a workplace plan, you can get a tax savings for up to 50 percent of the first $2,000 you put into such accounts.

Educational expenses

The Internal Revenue Code offers many tax-saving options for individuals who want to further their education. The tuition and fees deduction can help you take up to $4,000 off your taxable income and is available without having to itemize.

Partner with an expert and to plan your finances in the best possible way. A dollar saved is a dollar earned, When it comes to taxes, every dollar saved helps and taking the help of a professional will give you the necessary support and guidance in all your tax planning issues.

by: Gladeyas

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